The Taiwan dollar fell on Friday, hovering at a 5-1/2 month low, due to continuing fund outflows, the fall in local stock market and a globally stronger US dollar. The Taiwan dollar closed at T$31.330 to the US dollar, its lowest finish since February 25, weakening from previous session's T$31.240.
Volume on the main Taipei Forex Inc was active at $1.637 billion, slightly lower than $1.683 billion a day earlier. Foreign institutions continued buying US dollars, partly because Philips Electronics sold its remaining stake in contract chipmaker TSMC, said a dealer at a local bank.
Philips Electronics said on Thursday that it had sold its remaining stake in TSMC, which would result in a book gain of 260 million euros ($390 million). "The fall in the local bourse also prompted foreign investors to change the local currency into US dollar," said the dealer.
On Friday, Taiwan stocks fell 1.77 percent to end at a one-week low and foreign funds sold a net T$3.8 billion ($121 million) worth of stocks on Taiwan's local bourse. Foreign funds have now unloaded more than T$20 billion over the last three days.
The US dollar rose to a six-month high against the euro on Friday as gold prices tumbled to a 2008 low and oil slipped, leading investors to increase bets on easing inflation and slower global growth. Some oil importers were buying the US dollar, the dealer added.
In the non-deliverable forwards (NDFs) market, six-month NDFs were quoted at -0.200/-0.150, narrower than -0.220/-0.170 in the previous session, implying that investors saw the Taiwan dollar firming by a lesser degree in half a year.
Despite recent falls, the Taiwan dollar is still up 3.4 percent since the beginning of the year as investors bet on positive economic prospects under President Ma Ying-jeou, a proponent of closer economic ties with China. On the smaller Cosmos exchange, the Taiwan dollar closed at T$31.350, down from Thursday's close of T$31.270.